Saturday, March 7, 2015

Precious Metals Market - One of the Most Hatred Sectors

Well, in the Precious Metals (PM) market once again we see the same story.
Some time ago I presented the chart showing the probable "Head and Shoulders" pattern. Well, as you can notice at the chart above, the pattern has been negated.

Now, we are once again in the PM market downtrend:

But still, PM market relative strength against the broad equity market is testing its lows. Look at the chart below:

So the thesis, that a new big bull market in the gold sector may start again, is still intact.

For example, Juniors are still being accumulated. The chart below presents a few best juniors (maybe except from Midway Gold, which goes the same as the broad PM sector), which perform much better than the broad PM sector equities. As you can notice, new, promising mineral assets are being widely bought.

Apart from Juniors, there are some companies, which perform much better than the PM sector. Please, look at the chart below:

  • Randgold (NYSE: GOLD) is one of the best gold miners in the world - see my article on the Seeking Alpha website.
  • Franco-Nevada is the streaming company - the company looks for profitable PM purchase agreements signed with PM miners.
  • Fortuna Silver Mines and Fresnillo are silver and gold miners.

All these companies, due to their sustainable competitive advantage,  perform much better than the whole PM sector. Therefore they seem to be suitable for conservative investors.